Question

Jane goes to her local bank to discuss an automobile loan. Jane is unsure about borrowing money right now and asked the lender if she should be worried about interest rates changing. Which of the following is the best advice the lender could give Jane?

• Interest rates change and recently they have been at their historical lows.

• Interest rates have generally been decreasing for the past 100 years.

• Interest rates generally stay the same so there is no need to worry about changes.

• Interest rates change but recently they are above their historical average.

• Interest rates change but the only factor is Jane’s credit risk

Answer 1

The answer will be (c)

Interest rates generally stay the same so there is no need to worry about changes.

Basically When taking out a automobile loan, the contract specifies the interest rate, the loan term and the monthly payment. With a simple interest auto loan, interest accrues on a daily basis based on the outstanding balance .

so there is no need to worry about changes.